I was having a conversation with a colleague about “value” and what the financial “industry” does that creates value. I realized that he and I didn’t agree on the origin of value. He believed that value is defined by the consumer, and that whatever someone will pay for is inherently valuable. I believe that value is defined by need Continue reading
Tag Archives: ecomomics
Creating Value – what the economy is supposed to do…
I am not an economist, nor am I a student of economic theory. I have a limited understanding of the theories of money, and as simple understanding of the principles of capital markets. But I do understand the theory of value. Value is created when humans expend effort toward the creation of a product, or towards the execution of a service. Those products and services have a cost (unit effort + material input + a share of (infrastructure + marketing)), and in a relatively unconstrained market (no such thing as a free market) the products and services have a value (how much someone will pay for it). Continue reading